It’s the Wealth Gap, Stupid: Inequality Drives ‘Economic Anxiety’—Both Real and Perceived
One of the most prominent story types of 2016 election coverage involved dropping in on Southern and Rust Belt communities that supported Donald Trump and probing the people and their towns for answers. The economic “anxiety” of the white working class emerged as an explanation for why an ill-tempered real estate magnate had become the champion of voters who might in other years have been turned off by his conspicuous affluence, lackadaisical faith and combative demeanor, to say nothing of his “Access Hollywood” tape. Trump voters, it was said, have been left behind economically by globalization and the technological divide and have seen their economic prospects plummet in recent years.
Some of that lined up with reality. But when the data emerged, another picture emerged of a key Trump voter bloc — still overwhelmingly white, but not necessarily economically insecure. A majority of Americans who make more than $50,000 a year voted for Trump, compared to a majority of those who make less who voted for Hillary Clinton. The narrative then shifted to racism, as data also showed it drove Trump voters to the polls.
As a new book by social psychologist Keith Payne explains, the narratives aren’t mutually exclusive or necessarily contradictory. In “The Broken Ladder: How Inequality Affects the Way We Think, Live and Die,” Payne explains the research that shows that inequality can predict outcomes previously associated solely with poverty, such as higher infant mortality rates, lower life expectancies and higher rates of obesity. Areas with a larger wealth gap tend to have more of these problems than those with more homogeneous standards of living.
Even more relevant to the question of “economic anxiety” is the research that shows perceptions of inequality are just as important as actual numbers. When people feel poor—regardless of whether or not they objectively are — they exhibit risk-taking behavior and act in their short-term interests. When they feel richer, they practice delayed gratification and plan ahead.
“We have to look at ordinary middle-class people and ask why it is that, regardless of actual money, so many of them feel that they are barely getting by, that they are living paycheck to paycheck to paycheck, that the neighbors know something they don’t, and that if they could just earn a little more, then everything would be a bit better,” he writes.
These perceptions have real outcomes, according to Payne. People who locate themselves on a lower “rung” of perceived affluence are more likely to suffer from depression, anxiety and chronic pain, and it’s more probable that they will make bad decisions, underperform at work, suffer health issues like obesity and heart problems, and even believe in conspiracy theories.
Contrary to the “bubble” argument, it’s also not true across the board that poor people vote Republican and the affluent vote liberal. Higher incomes result in a higher probability of voting GOP. But feeling poor — or well-off — plays a role.
“The tendency for the rich to vote Republican is stronger in poor states than in rich ones,” Payne writes. “If you are a wealthy Mississippian, you are much more likely to vote Republican than if you have the same wealth in New York or Connecticut.” Social comparisons — a six-figure income makes you feel more well-off in Tunica than in Manhattan — affect how people think about politics and therefore how they vote.
Payne’s book encourages us to look beyond bank statements at how people think and feel as a better predictor of behavior. The incomes of the poor and middle class, when adjusted for inflation, have been fairly stagnant since 1980, while the wealth of the 1 percent continues to rise. Feeling poor — and the anxiety that goes along with that — is relative.
“Even though the subjective experience of poverty or subjective experience of wealth and subjective experiences of inequality are what drives so many of these effects, the consequences are not just subjective,” Payne told me. “The subjective perception is important, but we can’t lose track of the fact that it ends with objective outcomes.”
I spoke with Payne by phone last week, after the House of Representatives voted to repeal and replace the Affordable Care Act with the support of many constituents who simultaneously rely on Obamacare and have called for its repeal.
You’ve just written a book about inequality, and you’re from Kentucky. What did you think about J.D. Vance’s “Hillbilly Elegy?”
I thought it was a really interesting memoir. Even though I grew up in western Kentucky and he’s writing about eastern Kentucky, I recognized a lot of the experiences he talks about and the mentality of people. I thought it was excellent [as] a memoir of personal experience. I was a little surprised toward the end when the author seemed to throw up his hands and say, “But in the end there is nothing do about these problems.” I would disagree with that implication.
You mean the implication that it’s an inherent cultural issue that keeps people poor and unhealthy and unstable, that there is nothing that you can really do without changing people’s entire perceptions of who they are?
That’s right. People are exquisitely sensitive to their contexts. Both economic policy and history show that if you change the economic context in which people live, then they start to behave differently and think differently. I think the reason that people sometimes get into the self-destructive patterns of behavior that “Hillbilly Elegy” talks about is that they are responding in what is a reasonable way to their immediate circumstances. If you change those circumstances, people’s thoughts and behaviors change too.
People tend to look around and say, “Well, whatever the baseline is, whatever the default is, you know, that’s just normal.” But of course the conditions that are leading to the growing inequality that we see around us today are the result of policies, and policies are the result of choices.
Different places, whether it’s different states or different countries, make different choices. As a result, they have different levels of inequality. And you can see that reflected in people’s lives.
I think people are responding to their environments, and their environments are the products of choices.
One of the media’s big obsessions has been the struggle to understand how Donald Trump became president. One of the themes that emerged from this is the “economic anxiety of the white working class.” When that narrative is countered with actual statistics — when it turns out that a lot of Trump voters are relatively well off, especially if you compare their incomes to working-class minority Clinton voters — how come those two things don’t really align with each other?
Subjective perception is incredibly important. Think about how much it takes to feel like you are getting by OK today as opposed to 100 years ago. It takes much more. Think about how much it takes to feel like you are getting by OK in America as opposed to, say, in Bangladesh. It’s very different. And in the same way, it takes more to feel like you are getting by if you are in a context in which some people are really getting ahead. It feels like other people are all passing you by. That feeling of being left behind is something that a lot of journalistic accounts of the 2016 election have pointed out as a major motivator for people who voted for Donald Trump, and I think that’s probably right.
But the feeling of being left behind isn’t inconsistent with the idea that people actually have above-average incomes, [as] Trump voters [did] on average. If you look at how incomes have changed over the last 50 years or so, the bottom two-fifths are making — with inflation, in adjusted dollars — almost exactly the same as they were making in the late 1960s. That hasn’t changed.
What’s changed is that the top 5 percent, the top 10 percent, the top 1 percent have been making drastically more over time. Making the exact same amount today as maybe your grandparents’ family made in the ’60s feels like you are being left behind, because other people are getting so far ahead.
What is it that makes some people think, well, the enemy, so to speak, is that 1 percent, or that fraction of the 1 percent, who are getting wildly ahead while the rest of us are being held back? While other people think, well, the enemy is other people around me who I perceive are getting unfair advantages? There’s a big divide there between progressive and conservative voters, in terms of who they see as their economic opponents.
The changes in the economy that have led to this growing inequality are actually very complex and very abstract. So there are things like globalized patterns of trade, technology, robotics and policies that have not changed tax rates, or redistribution policies, in ways that keep up with the growing wealth at the top; that’s all very abstract and complex. Ordinary people, when they’re thinking about their lives and they’re thinking about politics, don’t typically focus on abstractions as explanations.
And so there are different competing narratives out there. Some, like you said, focus on the 1 percent as the concrete cause of these problems. Other competing narratives [include] maybe it’s immigrants coming in and taking our jobs, or maybe it’s environmentalists trying to destroy jobs in coal country, those sorts of things. Those are very concrete. There is an identifiable person who’s the bad guy. And so all of those [narratives] are going to have an advantage in terms of people’s minds as being plausible explanations. There is somebody doing something that’s leading to my particular condition.
Is it the 1 percent on Wall Street that are the bad guys, or is it immigrants coming in and taking jobs? Which one seems more plausible to you is going to depend on how much those different narratives fit with the worldviews that we already have. Those are conditioned by the social networks we’re a part of, the places we live in and things like levels of education and all of those background factors that predispose some people to resonate more with the liberal version of the story and others to resonate more with the conservative version of the story. But all of those are pretty concrete oversimplifications compared to what’s driving inequality on a macroeconomic level.
Do you think it’s possible for Americans to come together to address those abstract issues of inequality, or is that just beyond the scope of a country of our size and geographical diversity, with the historic racial issues that we’ve had?
In a representative democracy, the way this works is that individual citizens don’t necessarily have to have complex mental models of economic policy, right? Policy elites who actually focus on these issues, whether it’s in government or in think tanks and places like that, they are the ones who grapple with the more complex issues. I think it’s a shame that the experts are allowing themselves to be polarized and partisanized along with the electorate. Ordinary voters vote for politicians, whose job is to be an intermediary between the expert policy [theorists] and explain it to ordinary people. Unfortunately, the voters and the politicians, as well as the experts, are only listening to their own side. I think a lot of responsibility rests on both the politicians and the experts to listen to the evidence.
One concrete manifestation of these theoretical and economic models that’s changing in front of our eyes is health care. Republican voters on one hand are saying, “I love having health insurance now; it’s saved my life” and on the other are saying, “But I’m still going to vote for the guys who are promising to do away with it.” But coverage of pre-existing conditions is a concrete thing; a person with a household budget and awareness of their own health can put their hands around that issue.
The common thing is that people don’t always connect the way that they view individual cases to the way that they view policies about how entire systems work. So for Republicans right now, there is a conflict between [their individual cases], especially for lower-income people who would benefit from Obamacare, and the messages that they’re getting otherwise from Republican leaders.
But also, the general worldview that is more popular among the right says that America is a well-functioning meritocracy in which everybody earns what they get and their rewards are just. That’s a much more frequently endorsed worldview on the right than the left. So that creates a conflict for people, especially [those] who would actually benefit from benefits like [affordable] health care.
In terms of the psychology of it, it’s not surprising that we focus on one issue at a time and then say to voters, “Well, you know, if you hope to repeal Obamacare, it’s going to hurt you. Now, do you still want to vote for Republicans?” One issue isn’t going to flip somebody’s entire worldview because we are so polarized and sorted into not only political issues, but also urban and rural, highly educated and less educated, more religious and less religious; all of these things go together in a package and no single issue is going to flip somebody from one camp to the other just because it is inconsistent with all of the rest.
What people do in those situations, both on the left and the right, is engage in what psychologists call “motivated reasoning” to reduce that cognitive dissonance. So, any single issue is unlikely to flip somebody’s entire worldview, so that means they have to reconcile, usually by some sort of post-talk reasoning.
Such as reconciling the belief in the sanctity of the American meritocracy, yet also feeling a deeply unfair sense of inequality. Those seem to be at odds with each other. If you really believe in the meritocracy, then you should then believe that your position in life is exactly what you deserve. It’s what you’ve earned. It’s what you’ve worked for. But that’s not actually how people are reacting to the growing inequality in our country, right?
Right. If you believe in that “just world” theory — that the world is generally a fair and just place where people get what they deserve and deserve what they get — then you will tend to assume that whatever people have is what they deserve, unless you think somebody’s cheating. Now, both sides think somebody’s cheating, but it’s different cheaters.
In one of [author and sociologist] Arlie Hochschild’s books, she talks about a narrative on the right that imagines people standing in line waiting for their just reward, and other people keep cutting in front of them. In that narrative, it’s often immigrants or African-Americans who are getting special benefits and cutting in line. That’s a very common view.
In general, if people don’t feel like they’re getting outcomes that they deserve, it’s easy to find somebody [they believe is] cheating to blame it on. On the left, that is often Wall Street or other kinds of big corporations that are rigging the system.
So who’s right?
I think both of those narratives are oversimplified stories, but I think there is good empirical evidence that shows that the kinds of economic policies we vote for have influences on the amount of economic inequality that there is. So, the kinds of higher taxation and redistribution — policies that characterize Western Europe — result in less income inequality than the low-taxation, low-redistribution policies in America. The economies and policies that are in places like Utah, Iowa and Vermont end up having less inequality than Mississippi, Alabama, New York and California.
In terms of who’s right, I think if we care about inequality as a problem — and I think we should, because it predicts lots of poor life outcomes — then the right thing to do is to make decisions that reduce inequality, or at least limit its growth. Usually that means more progressive taxation. Usually it means strengthening a safety net for the poor, not reducing it, and it sometimes could mean rules that limit inequality at the top, like rules discouraging or capping excessive pay for CEOs. I’m not a policy person. I’m not an economist. So I don’t want to recommend specific policies to people. The point I want to make is that we shouldn’t see political decisions as disconnected from our daily lives because they affect our incomes, not only in terms of our own incomes, but those we compare to.
Let’s circle back to the narrative that blames immigrants and African-Americans for jumping the line, so to speak, thereby cheating white Americans out of their meritocratic due. You have a whole chapter on racial inequality in the book. Can you talk about how the perception that we’re in a post-racial culture now affects inequality, and even keeps people who are in the same economic class from working together to combat inequality?
The perceptions of how racial inequality has changed over time are dramatically different if you ask white Americans and black Americans. If you ask white and black Americans how much discrimination against black people there was in the 1950s, both white and black Americans say, yes, it was a terrible problem — there was a terrible amount of discrimination against black people in the 1950s and 1960s.
But if you ask how those things have changed over time, those perceptions diverge dramatically. Black Americans see a very slow decrease in anti-black racism over time, and they think that anti-white racism is basically nonexistent — in the ’50s, as today. But if you ask white Americans those same questions, they think anti-black racism has declined precipitously and is at very low levels today, and at the same time white Americans perceive anti-white bias to be increasing in proportion to the degree that anti-black bias has been decreasing.
One poll found that if you ask white Americans those questions about how big a problem anti-black racism is and anti-white racism is, they perceive that by the 2000s, there is actually more anti-white bias than anti-black bias, which is just astounding compared to real economic data or real behavioral data showing that if white and black job applicants apply for the same job using the exact same résumés for the purposes of a study, and they’re exactly equally qualified, black applicants are called back at a rate about half as often as white applicants. There are very high current rates of ongoing discrimination, but average white Americans aren’t tuned into that.
Where do you think white Americans get this idea that they are the ones who are being racially discriminated against?
Yeah, that’s a good question. First of all, social networks are incredibly segregated still, so few white Americans know very many black Americans and still fewer know them in terms of close personal relationships. So, that’s part of it. Most white Americans just don’t see the experiences of black Americans on a daily basis. When discrimination happens, it’s usually covert, so nobody’s announcing it. Black Americans are more likely to actually experience it on a day-to-day level and white Americans are less likely to witness it.
People want to believe that the world is fair and just, and if that is not contradicted by seeing racial discrimination in front of you, it’s often the easiest thing to believe that it’s just not a problem.
I can understand where the myth that racism is over because it’s not the 1950s any more comes from. Where I’m losing them is the idea that anti-white discrimination is significant and growing, especially with the rise of the alt-right, with actual neo-Nazi groups having legitimate political influence today, when they seemed completely marginal and on the fringe 20 years ago. That strikes me as a dangerous delusion. How do you go from “I think everyone is OK and racism is over” to “I’m the one being racially discriminated against,” despite a lack of empirical evidence?
I agree. It is a delusion and it’s a dangerous delusion. Part of the source of that comes from the fact that for whites, the two perceptions are correlated.
What I mean by that is that for whites, the more progress they see for African-Americans, the more they also think that anti-white bias is increasing. And so they see it as a zero-sum game. This is from research by psychologists Sam Summers and Michael Norton that I’m drawing on. For white Americans, if they see more diversity in their workplace, for example, and more diversity in their neighborhood than there was 20 years ago, they assume that that must have been because of some kind of affirmative action policy that discriminated against whites. Those two things are linked together in the minds of many white Americans: If African-Americans are making progress, it must be at the expense of whites.
It’s a difficult problem, how to advance the interest of diversity and inclusion without also alienating people who feel that it’s coming at their expense.
So where do we go from here? We live in a wildly unequal society, in a country that is really polarized on how to fix that, or even whether or not it is an issue to fix. If you had to pick one key cultural or psychological thing that has to change in the minds of Americans to move us forward, what would it be?
Well, it’s a great question. I think one of the things that would help in terms of understanding racial inequality is having greater contact across racial lines. Not just, “Oh, I know a guy at work.” One factor that seems effective at reducing people’s implicit racial biases is having close personal contact across racial lines. Cross-race marriage in your family, for example, if you have in-laws. . . . One study showed that [in an experiment using faces] white Americans showed faster fear-learning whenever black faces were paired with electric shock than white faces, as if there was already a pre-existing level of fear there. And it was slower to extinguish when the shocks went away. But that didn’t happen for people who had had interracial dating relationships in the past. Those kinds of close personal relationships, rather than just formal relationships — like having somebody [of another race or ethnicity] in your workplace — are more powerful. But at the same time that’s not the kind of thing that easily changes.
Right, and on an institutional level, it’s not the sort of thing that can drive policies that are more attuned to addressing racial inequality. Donald Trump can appoint Ben Carson to all the Cabinet positions that he wants, but that doesn’t mean that Trump is necessarily invested in policies that are going to address ongoing racial inequality in the country.
It’s important to understand people’s beliefs and their emotions, but when it comes to trying to actually reduce prejudice and reduce discrimination, I think a more effective short-term strategy, rather than trying to change people’s hearts and minds, is trying to structure situations well, so that when people are making decisions like who to hire, who to admit to colleges and so forth, their decisions are made in a way that minimizes the potential for bias. Let’s assume that most people who are hiring or making admission decisions would like to be fair, but people are vulnerable to all sorts of unintended biases. There are strategies that we can take.
Some of them are things like blinding résumés, so you don’t know who the person is who’s applying until you’ve already looked at their qualifications. Things like specifying the criteria that are important up front, so you don’t look at a job candidate and perhaps feel uncomfortable and then decide, “Oh well, this person is not a good fit,” without ever specifying what a good fit means. There are a lot of mental gymnastics that people go through that can be taken out of decision processes that would minimize the potential for bias.
And the other thing that is important is recognizing that bias is so pervasive. Evidence on implicit bias shows that it’s widespread. We should realize that the baseline condition is not equality; it is bias. So if we don’t do anything, if we are just passive and assume a colorblind competition process [without actually creating one], then the outcome is going to be disparities. So that means we have to take other kinds of affirmative steps, like actively trying to increase the inclusiveness and representativeness of job applicant pools, for example.